CEOs of the nation's fastest growing private companies expect a significant increase in productivity over the next 12 months, with most of the credit going to workforce efficiencies and technology improvements - and some attributed to good, old-fashioned restraint, according to a recent PricewaterhouseCooper study.

Sixty percent of surveyed CEOs expect their company's productivity will increase - including 21 percent saying its growth will be "much greater." An additional 39 percent says "somewhat greater," with only 37 percent expecting it will stay about the same. Just two percent said productivity will be somewhat lower; one percent was uncertain. Those expecting an improvement see an average of 14.2 percent over the next 12 months. Overall, an increase of 8.3 percent is anticipated for all surveyed companies.

Almost all CEOs expecting higher productivity (98 percent) say their workforce's performance and efficiency is definitely a contributing factor. Next in importance is IT technology improvements, cited by 78 percent. But, two things that management is holding back on also receive some of the credit: not jumping the gun on hiring, cited by 73 percent; and limiting expensive or risky new business initiatives, 58 percent.

Other contributors include non-worker efficiencies such as lower cost of goods and materials (cited by 34 percent), and lower staff support (29 percent). Use of domestic outsourcing suppliers was noted by 22 percent; but relatively few cited offshoring to foreign outsourcers (nine percent), or to their own workers in subsidiaries abroad (six percent).

Businesses expecting higher productivity have increased revenue at twice the rate of all other fast growth companies over the past five years - 447 percent, versus 206 percent, respectively. And, they expect an increase of 23.3 percent over the next 12 months, versus 17.6 percent.

Because of their faster growth, they are more likely to add to their workforce in the year ahead: 82 percent expect a net increase in hiring (versus 73 percent of all others). They also plan to add a greater number of workers - an increase averaging 11.1 percent, versus 7.4 percent for all others.

They attribute 10.1 percent of their revenues to the Internet, versus 7.2 percent for all others--a difference of 40 percent.

Also, more are expecting to fund a number of increased investments over the next 12 months, including:

  • 53 percent who are budgeting more for IT, (versus 40 percent of all others);
  • 44 percent for new product or service introductions (versus 35 percent);
  • 39 percent for sales promotion (versus 30 percent);
  • 36 percent for advertising (versus 23 percent); and
  • 22 percent for R&D, (versus 12 percent).


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